If you live paycheck-to-paycheck, or you just don’t know howto handle your money, it’s time to learn. The best money habits can help youstop living paycheck-to-paycheck, and can also help you achieve your financialgoals.

Most people aren’t aware of the simple changes they can maketo achieve financial freedom. It doesn’t matter if you make $30,000 or $150,000a year, the same tips apply to anyone.

Pay yourself First

Think about your money habits. When do put money away forsavings? Is it last? Do you pay all your bills and spend what you want and thensave? Like most people, you’re doing it backward. Think about the last time yousaved money and how many months you skipped. If you pay yourself first, thiswon’t happen.

Set up automatic transfers each month in the amount you knowyou can afford. This takes the thinking out of it and eliminates the chance ofspending your money before you can save it.

Set up an Emergency Fund

Everyone needs an emergency fund. Whether you lose your job,fall ill, or can’t work for another reason, having the money available in anemergency account will help float you until you get back on your feet.

An emergency fund should have 3 to 6 months of expenses init. Pull out your bank statements and see how much you spend each month. Itwill be a big number, don’t panic. Start with a $1,000 goal and then work yourway up to save up to 6 months of your expenses.

Get out of Debt

Paying high-interest debt is an opportunity cost for savingand investing. Pay your debts off as fast as you can.

Here’s a quick trick.

Order your debts from smallest to largest balance. Now, payas much as you can to the smallest balance while making the minimum payments onall others.

Once you pay off the first card, take the amount you paid tothat card and add it to the minimum payment of the next card. Keep going untilyou are out of debt and can save the money instead of spending it.

Open a High-Yield SavingsAccount

Don’t settle for the savings account at your local bankunless you want to make 0.01% interest or $1 on every $1,000 you save.

Instead, open a high-yield savings account. You’ll find themonline. Most are free and pay higher interest rates. If you have money you cantie up for a while, consider an online CD, they pay even higher rates,especially if you can tie up your money for a year or longer. You’ll findinterest rates at 1.0 – 1.5% for the longer terms.

Save for Retirement Now

Don’t wait to save for retirement assuming ‘you have time.’Use time to your advantage by letting your earnings compound. The earlier youinvest, the more time your money has to grow.

If you have a 401K or 403b and your employer matches your contributions,don’t give away free money. At least contribute as much as they’ll match. Forexample, if your employer matches dollar-for-dollar up to 3% of your salary andyou make $75,000, contribute at least $2,250 so you get the ‘free’contributions.

Start a Rainy Day Fund

We all have expenses that fall outside of our normal budget.Don’t let them derail your budgeting efforts.

Think about the money you spend on gifts, sudden unexpectedexpenses, and other miscellaneous items. Your rainy day fund could cover thesecosts, so you don’t go over budget. Everyone saves a different amount for theirrainy day fund, but $1,000 is a good start.

Bank your Windfalls

Inheritance money, tax refunds, and work bonuses are allwindfalls or money you didn’t expect. You shouldn’t need the money for thedaily cost of living because it’s not your standard earnings.

Rather than depositing it into your checking account andspending it, immediately save it. Put the money in your high yield savingsaccount or CD. If you didn’t open one yet, now’s a perfect time. Let the moneygrow to help you reach your financial goals.

Track your Expenses

The best budget is the one you use. In other words, settingup a budget and not tracking your expenses defeats the purpose.

Instead, track your expenses. See what categories you’respending in and where you may need to cut back. You’ll have good and bad months– we all do. But when you track your expenses, you know where you made amistake and where changes are necessary to get you back on track.

Review your Budget Often

A budget you created today may not be a budget that worksfor you 6 months to a year from now. Re-evaluate your budget often.

As yourself:

·        Am I staying within the budget of each category?

·        Am I saving as much as I hoped?

·        Do I have a retirement fund started and growing?

·        Do I feel like I’m in charge of my money or ismy money in charge of me?

Once you answer these questions, you’ll know if you need torevamp your budget or continue like you were.

Start Improving yourMoney Habits

Good money habits are easy no matter how much money youmake. It comes down to staying aware, tracking your expenses, knowing yourbalance, and spending wisely. If you save money regularly, think aboutretirement (and save for it), and watch your budget closely, you can end yourpaycheck-to-paycheck living.

Start small and continually improve your money habits so youtoo can have financial freedom. It takes time and a lot of grace – don’t beatyourself up for mistakes or bad habits. Everyone learns as they go and if youlearn from your mistakes, you’re well ahead of the crowd.

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